Lenovo Admits to Acquisition Talks With Unnamed Third Party


Lenovo was forced to confirm this morning that it is in negotiations to make an acquisition amid rising speculation it is eyeing up IBM Corp.’s low-end server business again.

“The [board] noted certain articles published in the internet in relation to a possible acquisition by the company of certain computer server business,” the Hong Kong-listed firm said in a statement yesterday.

“The board would like to inform [our shareholders] and potential investors that the company is in preliminary negotiations with a third party in connection with a potential acquisition.”

Lenovo was said to be weighing up a move for IBM’s low-end server arm, including its x86 business, last April, before talks apparently broke down a month later over the price.

The Chinese vendor has already made a success of the PC business it bought from IBM back in 2005, taking the outfit from relative obscurity to the top of the global standings in the space of seven years. Investors responded positively to the prospect of a similar deal in the server space, with Lenovo’s share price spiking 3.5 per cent on the news.

According to a Wall Street Journal report over the weekend, IBM has rekindled talks to sell off its x86 business, which Morgan Stanley estimates generates almost a third of Big Blue’s $15 billion annual server sales. Various reports since then, including one from Reuters, have singled out Lenovo as the likely buyer, although other big OEMs including Dell have also been mentioned.

Lenovo added in its statement: “As at the date of this announcement, no material terms concerning the potential acquisition have been agreed and the company has not entered into any definitive agreement in relation to the potential acquisition.

“The board will make further announcement as and when necessary in compliance with the listing rules and applicable laws when a legally binding agreement is signed or there is substantial development in relation to the potential acquisition.”

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